EAGA calls to improve communications systems

By Benget Simbolon Tnb.

MANADO, North Sulawesi (JP): A seminar on investment opportunities in eastern Indonesia under the East ASEAN Growth Area (EAGA) concluded here over the weekend with a call to improve telecommunications and transportation systems in the area.

"The infrastructure to link the key centers in the growth area is very urgent if we are to facilitate faster flow of information among businessmen and the media in the subregion," Permanent Secretary of the Confederation of ASEAN Journalists (CAJ) Abdul Razak said, while reading from the joint statement issued by the seminar.

The three-day seminar, organized by the CAJ, was attended by about 100 journalists from ASEAN countries and was addressed by 11 government officials, including two ministers, and two private sector businessmen from Indonesia and the Philippines.

Speakers at the seminar urged the four governments involved in the EAGA cooperation -- Brunei, Indonesia, Malaysia and the Philippines -- to link the key centers in the ASEAN's subregion with better direct telecommunications and transportation.

Currently, people in Davao, for example, cannot make direct calls to Manado and the flight service between the two important cities in the subregion is only twice a week.

The seminar proposed cooperation among the EAGA's business councils and the establishment of a business center to intensify the campaign on the development of the subregion as a place to invest and trade.

The seminar also urged the subregion's working committee on trade to hasten the harmonization of export and import procedures in the area with a view to accelerating trade.

Herman Haeruman, the deputy chairman for regional development of the National Development Planning Agency (Bappenas), noted at the seminar that to make the economy in the eastern Indonesia grow at 7.1 percent annually, in line with that of the government's target for national economic growth, the country's eastern provinces will require a total investment of around Rp 200 trillion (US$86.6 billion) during the current Sixth Five Year Development Plan.

"To meet the investment needs, private sector investment is crucial. The private sector must take a leading role in the development of the area. We cannot rely only on government spending to improve infrastructures there," he said.

He added that government policy should be designed in such a way as to enhance private sector investments.

Constraints

He identified a number of development constraints in eastern Indonesia, including the low capacity of human resources, lack of economic infrastructure, the distance from economic development centers and geographic barriers, such as unstable land and rugged mountains.

Some provinces in the area defined as the "eastern Indonesia region", such as South, West and East Kalimantan and North and South Sulawesi have enough infrastructure compared to the eight other provinces that are involved in the EAGA subregional cooperation.

"Challenges to increase private investment in eastern Indonesia should not be only answered by public spending for infrastructure, but also by other means, such as the availability of quality manpower, simple and consistent bureaucratic systems, quality urban services and availability of reliable information," he said.

Asril Noer, an expert assistant to the investment minister, noted that to speed up development in eastern Indonesia, the government has already established one integrated economic development area (locally known as Kapet) in each province in the region.

"Every integrated area will be developed by the central government and the provincial administration with the participation of the private sector," Asril said.

He said that in July the Indonesian government issued a government regulation allowing certain industries to get tax facilities.

The new regulation stipulates that income tax on newly- established firms in certain industries can be borne by the government for 10 years in the western part of the country and for 12 years in the eastern part.

In addition to the incentives, the government has also provided special incentives for investors in eastern Indonesia, including the acceleration of depreciation and amortization, the carry-over of losses up to 10 consecutive years, 50 percent reduction of taxes on land and buildings and the employment of expatriates if needed.